Mr CHESTER: So anecdotally we believe that people think there is a perception that you can buy influence. We do not have any research to support that, do we, that we are aware of?

Mr Killesteyn: We do not have any research that supports that view or otherwise.

Mr GRIFFIN: I am pleased the commission has not wasted any money on that.

Senator RHIANNON: You could look at New South Wales. Commissioner, you have just spoken about the New South Wales legislation. I was wondering if you could expand on that. Could you inform us, if you have looked at both the New South Wales and the Queensland legislation, how you think it is working and if there are any pitfalls that you have identified.

Mr Edgman: We have had a bit of an overall look at the legislation for Queensland and New South Wales, not really to do a detailed critique of them but generally to inform ourselves. There is much in common between the two, although they take different approaches in some aspects, but the fundamentals of them are very similar. They are based on donation caps, expenditure caps and centralised campaign accounts through which all transactions for election campaigns have to be made. There is increased public funding. I have not quite done the sums, but it looks like the election funding is increased from what was previously the case in those two states, plus there is the introduction of ongoing annual administrative funding for political parties. That is all premised on previous election results—on both votes obtained and members elected. Third parties are also being brought in as part of the group that is going to be subjected to these regulations. So it is not just the primary players of political parties and candidates but also third parties: anyone else who wants to engage in the campaign, like the ACTU, the mining industry and so forth.

Senator RHIANNON: In your submission you have identified the complexity of handling third parties. What did you think of how they have handled it in that new legislation in Queensland and New South Wales?

Mr Edgman: I do not think they have come up with all the answers. That is my personal view. I think the compliance regime they have tried to implement is in no way going to guarantee compliance. This is always the concern, of course, with these new schemes—that the outcomes they seek to achieve are all premised on full compliance. There is little by way of new or innovative compliance strategies in New South Wales or Queensland. They are still largely dependent upon a penalty-and-offence regime of punishing noncompliance after the event. With donation and expenditure caps in particular, when trying to level the playing field and keep the relativities between the players, they start to become players within the integrity of the election outcome itself. There is little in either of those two pieces of legislation that seeks to enforce compliance or compel compliance at the time. It is waiting to investigate noncompliance and prosecute offences after the event.

Mr Killesteyn: With a lot of this you really have to go back to first principles: what is it that you are seeking to achieve in the design of any scheme? Most of the literature and most of the submissions that have been provided to the committee, as well as our submission, essentially focuses on two broad objectives. One is disclosure, on the basis that it is important to inform the community about who is involved in the political process. The second is obviously some sort of regulation to enforce or to control the so called arms race in relation to political expenditure.

With third parties, yes, it is complex. But I think what you have seen in Queensland and New South Wales is that there is a starting point, at least. The starting point is based on registration—associated parties having to register before they actually get involved in the political process. That at least starts the process of informing the community about who is being involved. It does not solve the problem. It is not a panacea, as Mr Edgman has highlighted, but it is certainly a start of the process.

Senator RHIANNON: Perhaps we could go on to some of the issues you raised in your own submission, about compliance. You raised the possibility of a candidate being restricted from taking their seat in parliament if vacant. They just cannot take their seat in parliament. In effect, they cannot vote in the parliament.

Mr GRIFFIN: So the electorate is disenfranchised in that situation?

Mr Edgman: Until the next election, I understand, that would be the case in Canada.

Mr Pirani: You would not be astray if you were to translate that to the qualifications of the candidate under section 44 of the Constitution. If a person were convicted of an offence with imprisonment of more than 12 months then they would no longer be qualified to be a candidate. Then you have the issue about whether there should be a by-election.

CHAIR: But Mr Pirani, they are specific provisions under the Constitution. This would be a legislative provision which does not necessarily do what the Constitution does if you breach it.

Mr Pirani: No. Sorry Chair, what I was raising was that we would not necessarily need to amend the Constitution. Whatever would need to be done electorally under the Electoral Act would need to be limited to what is in section 44 of the Constitution. So we could not go above or beyond that because that requires an amendment to the Constitution.

CHAIR: Yes, that is right.

Mr GRIFFIN: Also, if you came out with a remedy which disenfranchised the electorate you would probably have a problem with the Constitution, I would have thought.

Mr Pirani: Indeed. Elected by the people in section 7, section 24.

Mr Killesteyn: There is also a question of its effectiveness in that the case in Canada has now been outstanding since 2006 and the person has taken their seat, so what has it really achieved?

Senator RHIANNON: Just staying with your clients, I am not sure if it was in your submission but I have read about the idea of on-the-spot fines. Do you have any information about that? Generally, I am interested in whether you can expand on issues to do with compliance.

Mr Edgman: There are certainly opportunities within our current act to have the equivalent of on-the-spot fines. Late lodgement of disclosure returns, for instance, is a clear matter of fact and could be pursued along those lines. One of the issues that we face is that all the offences under the Commonwealth Electoral Act require court action and so it becomes quite complex and quite difficult to actually enforce a lot of those provisions, especially as the penalties for the offences are quite low. It is no easy matter to convince the Commonwealth Director of Public Prosecutions to take on the cases when they apply their public interest criteria.

Senator RHIANNON: Do you think it would be useful to have on-the-spot fines then? Would that be a way to deal with the problem that you have?

Mr Edgman: It would assist us, for sure.

Mr Killesteyn: I agree with Mr Edgman. I think there is some value in considering on-the-spot fines, particularly for late lodgement of annual disclosure returns as well as election returns. However, the issue needs a bit further thought as to who would be liable for that particular fine.

Senator RHIANNON: And what is your advice there?

Mr Killesteyn: Given that political parties are not incorporated entities it presents some options for us, including, perhaps, the Secretary of the National Party or it may be the accountant—anyone who could be nominated as having prime responsibility for lodging the return.

Senator RHIANNON: Right. You spoke earlier about the perception around political funding and, as we all know, we have this high threshold. Could you speak about the issue of transparency and if you think that it is limited when the threshold is set at $11,000 plus, which I think it is at the moment?

Mr Killesteyn: The threshold is 11½ thousand at the moment. If you contrast that with the bill that is currently before parliament, which seeks to set the threshold at, I think, a thousand dollars, ultimately it is a perception that many people will hold as to what the most transparent process is The commission does not at this point hold a view on what the appropriate threshold is.

CHAIR: But there were figures in the green paper that showed the amounts that were disclosed were very different to pre that increase in threshold, weren't there? Mr Pirani?

Mr Pirani: Certainly.

CHAIR: The change in legislation led to a lot less disclosure.

Mr Pirani: But the issue in the question that has been asked by Senator Rhiannon was: do we have a particular view as to what is the appropriate level? Again, that is not a matter where the AEC has proffered a view as to what is the appropriate level. Yes, the lower the level the more that is disclosed. That is a question of fact, and I think the evidence in the past bears that out. But the issue is what level is appropriate? That is your judgment, not ours.